Russia Monetary Policy


Central Bank holds interest rates stable for sixth month

On 26 November, the Central Bank decided to leave the refinancing rate unchanged at the historic low of 7.75% for a sixth consecutive month in a decision widely expected by the market. The Bank had cut rates 14 times since December 2008 by a total of 525 basis points, amid a year-long disinflationary trend. The Central Bank stated that it is necessary for the time being to maintain an accommodative monetary policy stance against a backdrop of moderating GDP growth in the third quarter and an increasingly uncertain global economic scenario. However, monetary authorities did not repeat their pledge of maintaining interest rates at the current level in the coming months, as they had done in last month's statement, thus leaving the door open to an interest rate hike in the near future. In addition, on 8 December, Chairman Sergei Ignatyev stated that the Central Bank is increasingly worried about rising inflation and that he did not exclude the possibility of raising interest rates in the first quarter of 2011.

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